Metals continued to show weakness yesterday with the base metals closing down an average of 1.1 percent led by a 2.5 percent drop in tin; nickel and zinc were down 1.5 percent, lead was off 1.1 percent, while copper was off 0.1 percent at $4,565 and aluminium was up 0.2 percent. Precious metals were down an average of 0.9 percent, with gold prices off 0.2 percent at $1,249.70, while the industrial previous metals were down between 0.9 percent for silver and 1.6 percent for palladium.
This morning the base metals are mixed and ranged between nickel that has rebounded 0.6 percent to $8,400 and zinc that is off 0.3 percent at $1,828. Copper is up 0.2 percent at $4,574. Volume on the LME has been 3,196 lots as of 06:10 BST, when the likes of aluminium have only traded 189 lots it does seem as though the summer slowdown has arrived early.
Precious metals continue to drift, they are down an average of 0.3 percent, platinum is unchanged at $1,006.50, while the rest are down between 0.3 percent for gold and 0.6 percent for palladium. Gold prices are last at $1,245.70.
In Shanghai, the base metals are down an average of 0.6 percent, led by a 1.7 percent decline in zinc, copper is bucking the trend with a 0.2 percent rise to $35,210, while the rest are down around 0.5 percent. SHFE tin prices are now back at around a $25 premium to LME prices having been at a discount of around $400-500 per tonne in recent weeks. Spot copper in Changjiang is down 0.1 percent and the spread is around an equivalent of $18 per tonne back. The LME/Shanghai copper arb ratio is at 7.7, which should mean the arb window is open for some traders.
In other metals in China, iron ore prices dipped to $52.70 yesterday, back at levels seen in March, steel rebar is down two percent, silver prices are off one percent and gold prices are off 0.5 percent. In international markets, Brent crude is last around $48.30.
Equities – yesterday the Euro Stoxx 50 was down one percent and the Dow was little changed, but this morning the tone is Asia is weaker with the Nikkei and CSI 300 off 0.8 percent, the Hang Seng is off 0.3 percent, the Kospi is down 0.7 percent and the ASX200 is down 0.2 percent.
The dollar index is holding up in high ground at 95.30, this is the fourth day it has been hovering around this level. The euro is flat in relatively low ground at 1.1213, down from recent highs above 1.1600, sterling has been weaker in recent days, last at 1.4480, the yen is firmer at 109.26 and the aussie is weaker at 0.7194. In emerging market (EM) currencies, the yuan is weak at 6.5460, the rupiah is trending lower, as are the rupee and the ringgit, while the rand, rouble and real are consolidating.
On the data front we have German final GDP, UK public sector borrowing requirement, German and EU ZEW economic sentiment, a UK inflation report hearing, CBI realised sales, an ECB financial stability review, US new home sales and Richmond manufacturing index. Also five months of Chinese leading indicator data (December to April) are expected to be released sometime today – see table below.
The base metals are in retreat mode as the correction from the January-April rally continues. Key is whether this is a correction, or was the rally just a counter trend move and prices are now resuming the downward trend. For now, we feel the former is what is unfolding, but it may take another turn round in the data to the upside for prices to head higher again, which may take time to emeger In addition, with the Brexit vote just a month away the possible contagion should Brexit happen, may well keep markets nervous.
Precious metals prices are correcting, the danger is that the pullback in gold prices prompts more fund profit-taking and given the size of the gross long positions in gold and silver profit-taking could lead to a sharp dip in prices. We do, however, expect dips to be attract buying by those who missed the initially rally.
Overnight Performance | ||||
BST | 06:09 | +/- | +/- % | Lots |
Cu | 4574 | 9 | 0.2% | 1478 |
Al | 1551 | -1.5 | -0.1% | 189 |
Ni | 8400 | 50 | 0.6% | 612 |
Zn | 1828 | -5 | -0.3% | 670 |
Pb | 1648 | -0.5 | 0.0% | 242 |
Sn | 16090 | 40 | 0.2% | 5 |
Average | 0.1% | 3,196 | ||
Gold | 1245.7 | -4 | -0.3% | |
Silver | 16.305 | -0.065 | -0.4% | |
Platinum | 1006.5 | -0.5 | 0.0% | |
Palladium | 544.7 | -3.3 | -0.6% | |
Average PM | -0.3% |
SHFE Prices 06:10 BST | RMB | Change | % Change |
Cu | 35210 | 60 | 0.2% |
AL | 12310 | -60 | -0.5% |
Zn | 14660 | -260 | -1.7% |
Pb | 12690 | -55 | -0.4% |
Ni | 67100 | -440 | -0.7% |
Sn | 105770 | -470 | -0.4% |
Average change (base metals) | 236.5 | -0.6% | |
Rebar | 1944 | -39 | -2.0% |
Au | 264.45 | -1.3 | -0.5% |
Ag | 3635 | -35 | -1.0% |
Economic Agenda | |||||
BST | Country | Data | Actual | Expected | Previous |
7:00am | Germany | German Final GDP q/q | 0.7% | 0.7% | |
9:30am | UK | Public Sector Net Borrowing | 6.3B | 4.2B | |
10:00am | Germany | German ZEW Economic Sentiment | 12.1 | 11.2 | |
10:00am | EUR | ZEW Economic Sentiment | 23.4 | 21.5 | |
10:00am | UK | Inflation Report Hearings | |||
11:00am | UK | CBI Realized Sales | 6 | -13 | |
All Day | EU | Eurogroup Meetings | |||
1:00pm | EU | ECB Financial Stability Review | |||
Dec Data | China | CB Leading Index m/m | 0.6% | ||
Jan Data | China | CB Leading Index m/m | |||
Feb Data | China | CB Leading Index m/m | |||
Mar Data | China | CB Leading Index m/m | |||
2:00pm | China | CB Leading Index m/m | |||
3:00pm | US | New Home Sales | 521K | 511K | |
3:00pm | US | Richmond Manufacturing Index | 9 | 14 |
The post Metals consolidate within short term downward correction trends appeared first on The Bullion Desk.
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Source: Bullion Desk News